The effect of earnings management on audit fees. Evidence from the manufacturing industry

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The effect of earnings management on audit fees. Evidence from the manufacturing industry

 
 
Title: The effect of earnings management on audit fees. Evidence from the manufacturing industry
Author(s): Mussalo, Veera
Date: 2015
Language: en
Pages: 64
Department: Laskentatoimen laitos
Department of Accounting
Major/Subject: Accounting (Laskentatoimi)
Keywords: Audit Fee, Audit Quality, Earnings Management, Real Earnings Management
Controlled terms: laskentatoimi, accounting, tilintarkastus, auditing, tilitoimistot, firms of accountants, palkkiot, remuneration, työ, work, laatu, quality, operaatiotutkimus, operational research
Location: P1 I  |  Archive number: 14176   |   Archive
 

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Abstract:

This study focuses on understanding the effect earnings management has on audit fees. Earnings management is
 
studied by examining real earnings manipulation through sales manipulation and overproduction.
 
 
The study is done using an OLS regression analysis. The sample consists of companies in the manufacturing
 
industry, chosen using two-digit SIC codes, data collected from the COMPUSTAT and AUDIT ANALYTICS
 
databases. Observations are from US based firms, total of 9541 firm-year observations during the period of 2008 to
 
2014.
 
 
The results suggest that earnings management through sales manipulation and overproduction are inversely
 
associated with the audit fee, suggesting that higher quality auditors decrease earnings manipulation practices.
 
Permanent link to this item:  http://urn.fi/URN:NBN:fi:aalto-201512165795
 
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